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Page 2 <br />PURPOSE: The Bonds are being issued for the purpose of funding improvements to the City’s Lions <br />Park and related public infrastructure projects. <br />AUTHORITY: Statutory Authority: The Bonds are being issued pursuant to Minnesota Statutes <br />Chapter 475 and Sections 469.1812 through 469.1815. <br />Statutory Requirements: Pursuant to Minnesota Statures, Sections 469.1812 through <br />469.1815, the City must specify the public benefit of the abatement, identify properties <br />located within its jurisdiction whose value will equal the proposed amount of abatement <br />and the term of the abatement, and further comply with public hearing requirements. A <br />public hearing was held on July 19, 2021, at which time the statutory requirements for <br />issuing tax abatement bonds were met. <br />SECURITY AND <br />SOURCE OF <br />PAYMENT: <br />The Bonds are general obligations of the City for which the City will pledge general ad <br />valorem taxes. In addition, the City will pledge available tax abatement revenue derived <br />from specified abated parcels within the City. The City will make the first levy in 2021 for <br />collection in 2022. Thereafter, each year’s collection of taxes and tax abatement revenue <br />will be used to make the August 1 interest payment due in the collection year and the <br />February 1 principal and interest payment due the following year. <br />STRUCTURING SUMMARY: <br />The Bonds have been structured with a repayment term of 20 years with approximately <br />level annual payments of debt service. The estimated interest rates applied in the <br />structuring of the Bonds are based on current market conditions and assume they will <br />receive premium pricing. Premium pricing results when coupon rates are assigned that <br />exceed market yields, thereby requiring investors pay a re-offering premium (an amount <br />above the face value of the bonds) to drive their yield back down to market levels, and <br />results in additional proceeds for the issuer. The underwriter who purchases such an <br />issue is compensated from the reoffering premium. Any premium received above the par <br />amount of the Bonds, after paying the underwriters compensation, can be (i) used to <br />reduce the issue size, (ii) used to fund additional project costs, or (iii) deposited into the <br />issuer’s debt service fund. The City will determine the use of any excess premium <br />generated on the day of sale. <br />SCHEDULES <br />ATTACHED: <br /> <br />Schedules attached for the Bonds include: (i) sources and uses of funds, (ii) pricing <br />summary, and (iii) debt service schedule, given the current market conditions. <br />RISKS/SPECIAL CONSIDERATIONS: <br />The outcome of this financing relies on the market conditions at the time of the sale. Any <br />projections included herein are estimates based on current market conditions. <br />The Bonds are structured with a reasonable estimate of premium pricing under current <br />market conditions, however, it is just an estimate - there is no guarantee those conditions <br />remain the same or the winning bidder prices the issue at the same estimated levels. <br />Market conditions constantly change, and actual bids received on the day of sale are likely <br />to be different than estimated. <br />SALE TERMS AND MARKETING: <br />Variability of Issue Size: A specific provision in the sale terms permits modifications to <br />the issue size and/or maturity structure issue once the price and interest rates are set on <br />the day of sale.